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Huawei launches its counter-attack by suing the US government

Another major front of Huawei’s counter-attack against the US government has been opened in the form of a lawsuit claiming the imposition unconstitutional sales restrictions.

Compared to China at least, the US has an open system of governance and judiciary and Huawei seems to have decided it’s time to test whether that system applies equally to foreign companies. This is taking the form of a challenge to the constitutionality of Section 889 of the 2019 National Defense Authorization Act (NDAA).

This is the bit of legislation, necessarily approved by the US Congress, that ‘not only bars all U.S. Government agencies from buying Huawei equipment and services, but also bars them from contracting with or awarding grants or loans to third parties who buy Huawei equipment or services, without any executive or judicial process,’ according to the complaint.

As previously reported Huawei has lawyered-up big-time for this choreographed counter-attack against the US, which includes a clear move to test the loyalty of its European allies. Its strategy for the US is to argue that its government’s actions in restricting Huawei’s activities violate the country’s own laws and even its written constitution. Essentially Huawei is publicly accusing the US of not playing fair.

“The U.S. Congress has repeatedly failed to produce any evidence to support its restrictions on Huawei products,” said Guo Ping, Huawei Rotating Chairman. “We are compelled to take this legal action as a proper and last resort. This ban not only is unlawful, but also restricts Huawei from engaging in fair competition, ultimately harming U.S. consumers. We look forward to the court’s verdict, and trust that it will benefit both Huawei and the American people.”

“Section 889 is based on numerous false, unproven, and untested propositions,” said Song Liuping, Huawei’s Chief Legal Officer. “Contrary to the statute’s premise, Huawei is not owned, controlled, or influenced by the Chinese government. Moreover, Huawei has an excellent security record and program. No contrary evidence has been offered.”

“At Huawei we are proud that we are the most open, transparent, and scrutinized company in the world,” said John Suffolk, Huawei’s Global Cyber Security & Privacy Officer. “Huawei’s approach to security by design development and deployment sets a high standards bar that few can match.”

The official announcement goes on to stress how bad it feels for US consumers starved of Huawei’s lovely kit, which seems like a bit of a reach, but is probably included to augment the ‘unfair’ narrative. The absence of Huawei will delay 5G and cost the industry more due to the lack of competition, we’re told, and if that wasn’t enough of a dig at its competitors Huawei reckons it will leave US consumers paying higher prices for inferior products. Miaow!

For some reason Huawei has decided not to counter-accuse the US of behaving in a similarly dodgy way, in a further bid to expose perceived hypocrisy. If it wanted to it could mention that some US networking vendors don’t exactly have a spotless security record themselves, or that the US has been suspected of similar nefarious acts to those it accuses China of perpetrating. Maybe that will be a more clandestine front in this escalating conflict.

At the core of Huawei’s counter-attack for some time has been a challenge to the US to substantiate its accusations. The charges against the company related to the arrest of its CFO have been detailed, but they are unrelated to this broad US restriction. The US has yet to present anything close to a ‘smoking gun’ with respect to Huawei as a national security threat and has largely relied on a general suspicion of dodginess to justify its actions.

With this move Huawei is challenging that, using the US’s own rules, which is somewhat ironic since the relatively closed and secretive nature of the Chinese state is a major contributor to US suspicions. It’s also signalling to the rest of the world that the US doesn’t play fair and casting itself as a victim, which is a strong card to play in today’s cultural climate. You can see the full press conference below, from which we’ve extracted some juicy quotes underneath, in case you don’t fancy sitting through the full 37 minutes.

Guo Ping

“The U.S. Government has long branded Huawei a threat. It has hacked our servers and stolen our emails and source code. Despite this, the U.S. Government has never provided any evidence supporting their accusations that Huawei poses a cyber security threat. Still, the U.S. Government is sparing no effort to smear the company and mislead the public about Huawei. Even worse, the U.S. Government is trying to block us from the 5G markets in other countries.

“[Section 889 of the NDAA] is an abuse of the U.S. lawmaking process. This section strips Huawei of its due process, violates the separation-of-power principle, breaks U.S. legal traditions, and goes against the very nature of the Constitution. Section 889 infringes upon our rights and harms U.S. consumers. In enacting the NDAA, Congress acted unconstitutionally as judge, jury and executioner.”

Song Liuping

“Section 889 is unconstitutional in its singling out of Huawei by name, blacklisting it, damaging its reputation, and denying it any way to clear its name and escape sanction. Its attack on Huawei is purposeful and punitive. When the law was being passed, Senator Tom Cotton said that Huawei deserved ‘the death penalty’ and that it should be put ‘out of business in the United States.’ And Senator Marco Rubio smeared Huawei as a ‘Trojan horse’ that ‘shouldn’t be in business in the United States in any capacity.’

“Huawei has never had a fair chance to confront or cross-examine its accusers. Nor has it been allowed an impartial adjudicator. The U.S. Congress has simply acted as law-maker, prosecutor, and jury at the same time, contrary to the American Constitution.”

John Suffolk

“The solution to cyber security will come from openness, agreed international standards certification schemes and transparency. It will not come through political posturing.”

Yang Chaobin, President of Huawei’s 5G Product Line

“After researching in 5G for over a decade, we are at least 12 to 18 months ahead of our industry peers. We have more than 2,570 essential patents, signed over 30 commercial contracts for 5G, and deployed 40,000 5G base stations, making us the No. 1 5G vendor in the world.”

Li Dafeng, Executive Member of the Supervisory Board, and Director of the ICT Infrastructure Managing Board Office.

“Currently, Huawei has over a thousand employees working across seven offices in the US. We have also invested substantially in the American telecommunications industry, including by establishing partnerships with hundreds of U.S. companies. We purchase billions of dollars’ worth of components, equipment, and software from these companies every year. The NDAA law can only impair Huawei’s long-term commitment to invest more and hire more here.”

Glen Nager, lead counsel of the action and Partner at Jones Day

“In signing the 2019 NDAA, the President of the United States objected that provisions of the NDAA raise significant separation of powers concerns and reflect congressional overreach.”

President Trump had yet to publicly comment on Huawei’s announcement at time of writing. Perhaps he was taking the time to memorize the names of everyone involved.

2 comments

“Compared to China at least, the US has an open system of governance and judiciary” undersells the difference between the two just a bit. According to the World Justice Project the US ranks 11th, while China ranks 87th in terms of Open Government (the Nordics, UK and Commonwealth nations, along with the ROK have locked up all of the best spots). The USA does show a bit worse in terms of Rule of Law, ranking 20th compared to China’s 82nd. Still a fair amount of daylight between the two.

One reckons that Huawei’s lawsuit will get a hearing, though I’d stake money that the Government does come along and say something along the lines that they have evidence, but for security reasons can’t present it in open court, or similar waffle. Then it becomes a question of whether or not the court(s) rule the government must present the evidence in closed session.

Whether or not Huawei prevails, it should be pointed out that they’ll get a far fairer hearing than a Western company or individual would expect to get in China in similar circumstances (i.e. Michael Spavor & Michael Kovrig). The US could and should do better, but it’s far better than China in this regard.

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